Government expands loan program for SMEs affected by floods
Earlier in March, the treasurer announced he would extend the Loan Guarantee Program for Small and Medium-Sized Enterprises (SMEs) Against the Coronavirus as part of its commitment to support up to $ 40 billion in loans to SMEs.
Called on SME stimulus loan program, it is specifically intended for SMEs that currently receive JobKeeper. The program is only open to JobKeeper payment recipients between January 4, 2021 and March 28, 2021.
According to the government, the program was designed to help businesses by providing them with more cost-effective access to finance, greater repayment flexibility, the ability to refinance existing loans in the system, and better manage their cash flow through an extended loan term. and lower combined reimbursements.
It will see the government take on more of the guarantee, moving from 50/50 support with banks to 80/20 split.
The expanded program will also increase the size of eligible loans (which can be secured or unsecured, excluding residential property) from $ 1 million under the current program to $ 5 million.
The Morrison government has now announced it will extend the SME Stimulus Loan Program, where, from April 1, businesses affected by the coronavirus pandemic and recent flooding in New South Wales and Queensland will also be eligible to access the program.
The government has said those businesses affected by the flooding will not be required to have been on JobKeeper during the March quarter to be eligible.
The expansion of the program will allow eligible flood-affected businesses with sales of less than $ 250 million to access loans of up to $ 5 million over a period of up to 10 years and to qualify. see also offering 24-month repayment holidays. .
Commenting on the expansion of the program to businesses affected by flooding, Prime Minister Scott Morrison said it would allow businesses to “rebuild quickly”.
“We want businesses and producers affected by the floods to get back on their feet,” he said.
“This loan extension will allow businesses to have the security of capital to develop a tailor-made recovery plan that suits them.”
Treasurer Josh Frydenberg also spoke about the extension, saying, “The federal government is committed to ensuring that small businesses receive the support they need in the face of these devastating floods.
“The expansion of this program will help businesses in flood-affected areas get back on their feet.”
Agriculture, Drought and Emergency Management Minister David Littleproud said the extension of the program would benefit businesses in regional and rural Australia.
“Bush businesses have already been affected by COVID and associated restrictions,” Minister Littleproud said.
“Flooding may slow their recovery but not their resolve.”
Major banks welcome extension
The big four banks have welcomed the government’s announcement to extend recovery loan programs to businesses affected by the floods.
Isaac Rankin, Managing Director of Commercial and Private Lending at ANZ, said: “These floods came at a really difficult time as many companies were already reeling from the effects of the global pandemic.
“The expansion of the government fund, along with financial assistance measures from banks such as ANZ, will provide useful support to a number of businesses as they recover from these devastating floods.
The Commonwealth Bank of Australia (CBA) said businesses can now begin the recovery loan application process (although the program is not yet effective for businesses affected by flooding).
Commenting on the latest government announcement, Mike Vacy-Lyle, Head of CBA Group, Merchant Bank, said, “We are very supportive of extending the federal government’s SME Stimulus Loan Program to affected businesses and communities. by flooding in New South Wales and Queensland. .
“Although the program does not open until April 1, we are committed to supporting businesses throughout the recovery, whether it is following the pandemic or the recent flooding. Our teams are here and ready to help you. “
The big bank said it had contacted more than 85,000 of its business customers in the past fifteen weeks to receive JobKeeper to find out how they were doing if they needed help.
The National Australia Bank (NAB) also said that businesses can now register their interest for the collection loan with the big bank.
Commenting specifically on the extension to flood-affected businesses, NAB Group management and private banking, Andrew Irvine, said: “NAB has approximately 70,000 customers in flood-affected areas – and we provide a range of supports, including cash grants of $ 2,000, as part of a $ 3 million fund.
“We are pleased to support the extension of the federal government’s Small Business Stimulus Loan program to those affected by flooding. In addition to cleanup assistance, it will provide them with the capital they need to restock and rebuild in the long term.
“Together, we can help affected businesses and communities get back on their feet, sooner.”
The Big Four Banks Announced disaster relief fund and emergency aid for flood-affected customers and businesses, including grants and waiver of application fees, while previously lenders have also announced financial relief options, including loan repayment deferrals.
[Related: Major banks offer flood relief, assistance]
Malavika Santhebennur is the Mortgage Securities Reporting Editor at Momentum Media.
Prior to joining the team in 2019, Malavika held positions at Money Management and Benchmark Media. She has been writing about financial services for six years.